The Longest Recovery

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1 Q SILICON VALLEY SILICON VALLEY RESEARCH & FORECAST REPORT The Longest Recovery MARKET INDICATORS Q Q % 13.45% Gross Absorption 5,987,278 SF 5,397,536 SF Net Absorption -293,292 SF 1,457,405 SF SILICON VALLEY AVAILABILITY 18.00% 15.00% 12.00% 9.00% 6.00% 3.00% 0.00% SILICON VALLEY GROSS ABSORPTION Squa re Feet in Millions Q4-12 R&D Office Industrial Warehouse NAVIGATING THROUGH THE ROUGH ECONOMY From an employment standpoint, this is the longest economic cycle from recession to recovery since the end of World War II, according to Moody s Analytics economic data. Looking historically at previous recession and recovery cycles, the average cycle lasted 26 months from peak employment pre-recession to the same level of employment post-recession. The current cycle began in December of 2007, reached its nadir in the second half of 2009, and now four and a half years since its beginning, the country has still only recovered half of the jobs it lost. Given the slow pace of this recovery, the news regarding the economy sounds like a broken record being played over and over again, making people wonder if anything has changed. Although the Silicon Valley is faring better than the country as a whole, there is still a long climb that is fraught with challenges to get back to where we began. In the Silicon Valley, leasing and user sale activity dipped slightly in the second quarter of 2012 generating 5.40 million square feet of gross absorption, a decrease of 9.8% compared to the 5.99 million square feet of activity reported in Q The decline may raise some eyebrows, but when compared to the historical ten year gross absorption average of 5.81 million square feet per quarter the decline is within a normal variance. Although we would like to see stronger activity overall, there seems to be little reason for concern because the market has naturally ebbed and flowed during this slower economic recovery cycle. There continues to be optimism in the Silicon Valley as the weighted asking rents for all four product types have increased by almost 7% since the beginning of the year. Given the nature of this slow recovery, part of the decrease in activity during the second quarter can be attributed to the landlords pushing up rent to see what the market will bear while the tenants muster up the confidence to follow. Although demand slowed down during the quarter, Silicon Valley s net absorption of commercial space was more robust than expected garnering a sizable occupancy gain. In Q2 2012, net absorption was positive 1.46 million square feet; the third highest occupancy gain since the first quarter of Also noteworthy is the fact that three out of the four commercial real estate product types that Colliers tracks had occupancy gains for the quarter, the exception being the office sector which posted an occupancy loss. Available space continues to decline, decreasing from million square feet at the end of Q1 to million square feet in Q2. Although the change in available space is lacking in magnitude, it continues to move in the right direction. Although there are concerns, there is a reason for the Silicon Valley to hope. In December of 2007, when turmoil in the economy first began, the Valley s unemployment rate stood at 4.9%. Since reaching its high watermark of 12.0% in January of 2010, Silicon Valley s unemployment rate clawed its way back to 8.4%. As the Valley treks through the recovery, the pace has been slower than expected. The Valley is halfway back but there s another half to go.

2 This is the third straight quarter of positive net absorption for the R&D sector, which is a promising trend. The R&D availability rate decreased to 14.1% at the end of Q2 from 14.4% at the end of Q1. The decrease marks eight straight quarters of decline in availability from the peak rate of 20.6% in Q R&D Silicon Valley s R&D sector posted modest results for the second quarter of After posting an extremely strong 3.26 million square feet of gross absorption in Q1, the R&D sector finished Q2 with a respectable 2.52 million square feet of demand just a tad shy of the 2.62 million square feet per quarter, ten-year average. Year-to-date, R&D demand is running at a 5.78-million-square-foot clip and is within striking distance of reaching Colliers forecasted 12.0 million square feet for Even though R&D activity took a dip during the quarter, the rate of previously occupied rollover space coming to market decreased promising trend. The R&D availability rate decreased to 14.1% at the end of Q2 from 14.4% at the end of Q1. The decrease marks eight straight quarters of decline in availability from the peak rate of 20.6% in Q The five largest R&D submarkets accounted for over 92% of the leasing and user-sale activity in Q2, with total gross absorption of 2.34 million square feet between San Jose, Sunnyvale, Santa Clara, Fremont, and Mountain View. Moreover, four of the five major submarkets registered positive net absorption for the quarter; the exception being Sunnyvale which experienced an occupancy loss in Q % 20.00% 15.00% 10.00% R&D AVAILABILITY & RENT TRENDS 5.00% Avg. Starting Rent $2.00 $1.50 $1.00 $0.50 $0.00 as well. The net result of the slower flow of space coming to market and average R&D demand was a Q2 occupancy gain of 882,647 square feet for the sector; a 26.4% increase in net absorption from the first quarter s 698,146-square-foot occupancy gain. This is the third straight quarter of positive net absorption for the R&D sector, which is a Silicon Valley s largest R&D submarket, San Jose, posted gross absorption of 649,418 square feet in Q2, 19.6% less than the 807,861 square feet recorded in Q1. Transactions included 8X8 signing a 104,657-square-foot lease on O Nel Drive and Skyera subleasing 81,778 square feet on Automation Drive. All in, R&D net absorption in San Jose was positive to the tune of 428,680 square feet, its third consecutive quarter of positive net absorption. The Santa Clara submarket benefited from InfoBlox taking 126,594 square feet on Coronado Drive and garnered a gain in R&D occupancy of 190,366 square feet for Q2. The Q2 occupancy gain was enough to offset the 98,604-square-foot R&D occupancy loss in Q1 and put Santa Clara in the black for the year. R&D gross absorption for Santa Clara was 341,598 square feet for the quarter. Fremont got into the mix with a Q2 R&D gross absorption total of 597,132 square feet, the highest amount of R&D activity Fremont has seen since Q R&D net absorption for the R&D LEASING & SALES ACTIVITY SELECTED COLLIERS INTERNATIONAL TRANSACTIONS - Q PROPERTY ADDRESS SQUARE FEET LANDLORD/SELLER TENANT/BUYER TYPE 3111 Coronado Drive, Santa Clara 126,594 Bixby Land Company InfoBlox Lease 3055 Orchard Drive, San Jose 111,285 JER/Lane, LLC TMG Partners Investment Sale 2125 O'Nel Drive, San Jose 104,657 Cannae Partners 8x8 Inc. Lease 6580 Via Del Oro, San Jose 81,158 South Bay Development Company Ken & Jim Taggert Investment Sale Maude Court, Sunnyvale 55,288 The Irvine Company LitePoint Corporation Renewal 82 Pioneer Way, Mountain View 34,985 Tufan Tech Center, LLC Bloomreach, Inc. Lease P. 2 COLLIERS INTERNATIONAL

3 Fremont submarket was a positive 113,922 square feet for the quarter. In the second quarter, weighted average R&D starting rents dropped back to $1.31 per square foot NNN, well off the Q2 anomaly of $1.67 per square foot. Taking the first half of 2012 as a whole, overall R&D starting rents are $1.51 per square foot NNN, right on target to hit Colliers forecasted weighted average start rate of $1.60 NNN at year-end. OFFICE After five consecutive quarters of solid occupancy gains, the Silicon Valley office sector was unable to keep up the pace and registered its first loss in occupancy since The occupancy loss for the quarter totaled a modest 117,772 square feet for the office market. Given the long drawn-out nature of the recovery, a few bumps in the road are to be expected during this slow recovery cycle. Office activity dropped 11.1% from the previous quarter and generated 1.35 million square feet of gross absorption in Q2, compared to the 1.52 million square feet generated in the previous quarter. Although the drop in activity may seem like cause for concern, prior to 2011, the fiveyear average for gross absorption is 1.39 million square feet per quarter, not much more than what was produced in this quarter. Available space increased in Silicon Valley s office sector during Q2 for the first time since Q Total office availability grew to OFFICE AVAILABILITY & RENT TRENDS 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Avg. Starting Rent Office activity dropped 11.1% from the previous quarter and generated 1.35 million square feet of gross absorption in Q2, compared to the 1.52 million square feet generated in the previous quarter. $4.00 $3.00 $2.00 $1.00 $0.00 million square feet during the quarter, translating to a 17.9% availability rate. Beyond the negative net absorption that contributed to the increase in available space, the Silicon Valley saw the delivery of two new office buildings totaling 306,900 square feet, which increased the building base and added to the higher availability rate. It was a mixed bag for the five major office markets with nondescript numbers across the board. On a gross absorption basis, two markets increased activity compared to Q1, two markets decreased activity compared to Q1, and one market stayed on par. On a net absorption basis, three markets had a loss in occupancy during the quarter and two markets had a gain in occupancy during the quarter. San Jose, the Valley s largest office market, recorded an occupancy loss of 70,481 square feet paired with a middling gross absorption total of 406,654 square feet. Santa Clara s office market posted an occupancy gain of 86,143 square feet in Q2 combined with a modest 274,233 square feet of gross absorption. Sunnyvale netted the largest occupancy loss of all the submarkets during the quarter, logging 152,025 square feet of negative net absorption. Sunnyvale s gross absorption was a nominal 142,838 square feet for the quarter. The largest deal for the quarter was LinkedIn s 75,810-square-foot lease on Mathilda Avenue in Sunnyvale. The next largest direct office deal was Chegg signing a lease for 45,000 square feet on Freedom Circle in Santa Clara. The remainder of office activity recorded in the OFFICE LEASING & SALES ACTIVITY SELECTED COLLIERS INTERNATIONAL TRANSACTIONS - Q PROPERTY ADDRESS SQUARE FEET LANDLORD/SELLER TENANT/BUYER TYPE 3990 Freedom Circle, Santa Clara 45,000 RREEF Cheeg, Inc. Lease 800 Concar Drive, San Mateo 43,925 Concar Acqusition (JP Morgan) Capcom USA, Inc. Renewal 333 W San Carlos Street, San Jose 28,618 Legacy Partners PDF Solutions Renewal 4000 E 3rd Avenue, Foster City 24,375 Tishman Speyer Home Depot USA, Inc. Lease 333 W San Carlos Street, San Jose 19,670 PDF Solutions Baynote, Inc. Sublease 2520 Mission College Blvd, Santa Clara 14,203 RREEF Toppan Photomasks, Inc. Lease P. 3 COLLIERS INTERNATIONAL

4 second quarter was made up of deals less than 30,000 square feet. Weighted average starting rents for office deals in the Silicon Valley decreased 14.9% in Q2 to $2.29 per square foot full service, compared to the previous quarter s mark of $2.69 per square foot full service. Much of the decrease in starting rents can be attributed to two factors observed in the quarter: the lack of any large Class A office deals and fewer deals in the high-rent Peninsula markets. The dearth of deals seen in the quarter could be due to any combination of summer doldrums, the culmination of pent-up deals from Class A corporate users, and some rent resistance as asking rates for the remaining high-end projects continue to soar. net absorption of 926,123 square feet in Q1. While the negative net absorption in Q1 is mostly attributable to one former user dumping space (Solyndra), the occupancy gain posted by the industrial sector in Q2 is noteworthy for being spread amongst many markets and users. Available industrial space decreased in the second quarter to 5.21 million square feet from 5.63 million square feet at the end of Q1. Likewise, the industrial availability rate decreased from 10.0% in the previous quarter to 9.2% at the end of Q2. INDUSTRIAL AVAILABILITY & RENT TRENDS Besides strong activity levels, the Silicon Valley industrial sector also deserves attention for garnering its largest occupancy gain in over two years and the second largest occupancy gain in over five years. Net absorption was positive 400,958 square feet in Q2 after posting negative net absorption of 926,123 square feet in Q1. INDUSTRIAL Industrial activity rebounded in Q2 as gross absorption measured 909,198 square feet, a 28.5% increase from the 707,817 square feet posted in Q1 and just shy of the ten-year quarterly average of 933,000 square feet. Apart from a lackluster Q1, the industrial sector has produced consistent demand of more than 900,000 square feet per quarter over the past two years. At that pace over the second half of the year, industrial deal flow will finish right at Colliers forecasted 3.50 million square feet of annual gross absorption. Besides strong activity levels, the Silicon Valley industrial sector also deserves attention for garnering its largest occupancy gain in over two years and the second largest occupancy gain in over five years. Net absorption was positive 400,958 square feet in Q2 after posting negative 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Avg. Starting Rent Demonstrating the strength of the sector and the mid-year point, four of the five major industrial submarkets posted occupancy gains during the quarter the exception being Mountain View, which already has a miniscule 5.0% availability rate. San Jose, Silicon Valley s largest industrial market, continued to remain solid, recording a $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 INDUSTRIAL LEASING & SALES ACTIVITY SELECTED COLLIERS INTERNATIONAL TRANSACTIONS - Q PROPERTY ADDRESS SQUARE FEET LANDLORD/SELLER TENANT/BUYER TYPE 975 Mabury Road, San Jose 27,770 Mark Allen Trust Legacy Sanitation Lease 2305 Paragon Drive, San Jose 15,250 Richter Trust American Residential Services Lease 1245 Laurelwood Road, Santa Clara 11,600 Biagio Cavalini Mobility Works of CA Lease 1381 N 10th Street, San Jose 10,000 Debra Shelstad AG Appliances Lease 1233 N 5th Street, San Jose 9, NFS, LLC U.S. Air Conditioning Lease 2070 Zanker Road, San Jose 7,840 Prologis Under The Nile Lease P. 4 COLLIERS INTERNATIONAL

5 156,019-square-foot occupancy gain for the quarter on the heels of 84,445 square feet of positive net absorption in Q1. Demand in San Jose remained strong as industrial gross absorption remained above the 300,000 square foot mark for the second straight quarter, tallying 349,810 square feet for Q2. Santa Clara and Fremont also registered strong second quarters, posting both solid industrial demand and positive net absorption. For the quarter, Santa Clara recorded 180,924 square feet of gross absorption, up from 63,627 square feet in Q1. The strong demand resulted in a healthy industrial occupancy gain of 70,014 square feet for Santa Clara the largest occupancy gain for that city since Q Likewise Fremont posted 198,258 square feet of gross absorption in Q2, a six-fold increase from the prior quarter for that city. Along with the solid demand, the occupancy gain for Fremont s industrial submarket weighed in at 145,628 square feet. Notable industrial deals for the quarter include Quanta Computer s 102,626-square-foot lease on Boscell Road in Fremont, Redwood City Electric occupying 48,600 square feet on Walsh Avenue in Santa Clara, and Legacy Sanitation signing for 27,700 square feet in San Jose on Mabury Road. In Q2, starting rents for industrial deals completed in the Silicon Valley nudged up slightly to $0.65 per square foot NNN from $0.63 per square foot the previous quarter. The increase is a bit of a surprise, as $0.65 per square foot NNN WAREHOUSE AVAILABILITY & RENT TRENDS 12.00% 9.00% 6.00% 3.00% 0.00% Avg. Starting Rent With the strong activity level and subdued rollover space returning to market, the Silicon Valley warehouse sector posted an occupancy gain of 291,572 square feet, a healthy indicator of stability in the warehouse market. is at the high end of Colliers forecast for the year, but if demand remains stable and availabilities continue to decline the remainder of the year, a solid bump in starting industrial rents for 2012 could be in the cards. $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 WAREHOUSE The pulse of the Silicon Valley s warehouse sector got a little stronger in the second quarter of 2012, registering 611,710 square feet of gross absorption. The activity for the quarter is a 21.7% increase from 502,535 square feet posted in Q1 and represents the greatest warehouse activity in the last six quarters. Year-to-date warehouse gross absorption measures 1.11 million square feet, right in line with Colliers 2012 forecast of 2.00 million square feet for the year. Available space for the warehouse sector continued to decline for the fourth straight quarter and at midyear, the warehouse availability rate registered 10.0%, down from 10.4% the previous quarter. On a square-foot basis, available warehouse space dropped below the four-million-squarefoot threshold for the first time in over a year, weighing in at 3.88 million square feet available at the end of Q2. At the end of the first quarter, available warehouse space stood at 4.01 million square feet. Preimproved warehouse space added to available supply measured only 320,138 square feet in Q2, down appreciably from the 843,471 square feet added in Q1. This lower rate of rollover space coming to market is much more indicative of a market in recovery. With the strong activity level and subdued rollover space returning to market, the Silicon Valley warehouse sector posted an occupancy gain of 291,572 square feet, a healthy indicator of stability in the warehouse market. The warehouse sector has posted only four quarters of occupancy gains WAREHOUSE LEASING & SALES ACTIVITY SELECTED COLLIERS INTERNATIONAL TRANSACTIONS - Q PROPERTY ADDRESS SQUARE FEET LANDLORD/SELLER TENANT/BUYER TYPE Christy Street, Fremont 190,080 BIT Investment Eleven, LP RK Logistics Group Lease Industrial Drive, Fremont 66,893 PS Business Parks, LP McCollister's Moving & Storage Renewal 215 Leo Avenue, San Jose 50,000 Nemo Ganoza Danny Recycling User Sale 2900 Faber Street, Union City 36,332 Prologis Day-Lee Foods Lease 2911 Mead Avenue, Santa Clara 26,808 Orchard Properties City Beach, Inc. Renewal 4005 Whipple Road, Union City 25,646 RREEF Tire & Wheel Master, Inc. Renewal P. 5 COLLIERS INTERNATIONAL

6 since the start of the recession, but two of them have occurred in the last three quarters. During the quarter, the Fremont submarket was the benefactor of two deals that were greater than 100,000 square feet. In fact, the three largest warehouse deals in the quarter occurred in Fremont RK Logistics Group leased 190,080 square feet on Christy Street, OnTrac s lease for 132,900 square feet on Boyce Road, and SRI International signed for 70,000 square feet on Osgood Road. All told, Fremont s warehouse activity in Q2 measured 407,192 square feet, or 66.6% of the total for all of Silicon Valley. As a result of this strong demand, Fremont warehouse also posted an occupancy gain of 309,272 square feet after a miniscule gain of 4,060 square feet of positive net absorption in Q1. The activity in the rest of the warehouse submarkets was relatively quiet, even in San Jose, the largest warehouse submarket. San Jose s gross absorption totaled 148,858 square feet in Q2, surpassing Q1 s paltry figure of 48,121 square feet. Despite the uptick in activity for the quarter, San Jose realized a warehouse occupancy loss of 59,860 square feet. Warehouse deals completed in Q2 had an average starting rent of $0.42 per square foot NNN, unchanged from Q1. As forecasted, Colliers expects starting warehouse rents to remain in the low $0.40 s NNN for the remainder of the year. UNDERSTANDING ABSORPTION Colliers uses several measurements to track market conditions and deal flow. While related, the formulas to arrive at these measurements differ. Using the results of the most recent quarter, here is how Colliers measures change in availability, net absorption and effective net absorption. Change in Availability: This measurement is simply the difference between the amounts of space available at the end of one period to the next. The table below shows that total available space decreased by 419,849 square feet in the year s Second Quarter. Note that change in availability includes adjustments for space that is taken off the market. Space taken off the market is not a factor in net absorption measurements. Total Available end of 1Q12 42,835,739 Plus: Vacant & Occupied Space that came available in 2Q12 4,391,850 Plus: New Shell added in 2Q12 306,900 1Q12 Available + Newly Available in 2Q12 47,534,489 Less: 2Q12 Gross Absorption -5,397,536 Less: 2Q12 Adjustments/Taken off Market 278,937 Total Available end of 2Q12 42,415,890 Net Absorption: Net absorption measures the change in occupied space from one period to the next. In this measurement, it is important to distinguish that a building may be available, but not vacant (often the case in a sublease situation, for example). Therefore, occupancy is not reduced (negative net absorption) until the space is vacated, and sometimes that does not happen until the space is leased, creating a net absorption wash for the deal and for that particular period. New Vacant Space that came available 2Q12-2,183,588 Previously Available Space that was vacated in 2Q12-1,756,543 2Q12 Total Vacant added (Occupancy Loss) -3,940,131 2Q12 Gross Absorption (occupancy gain) 5,397,536 2Q12 Net Absorption (change in Occupancy) 1,457,405 Effective Net Absorption: In 2003, Colliers created a measurement of effective net absorption. Effective net absorption uses the same formula as the net absorption formula, except that it treats any space that comes available as if it is vacant, whether it is or it isn t. The purpose of the measurement is to get a better real time gauge of occupancy flow in and out of the market, acknowledging that space that is available for lease is likely to be vacated shortly and underutilized presently. New Vacant Space that came available 2Q12-2,183,588 Occupied Space that came available 2Q12-2,208,262 2Q12 Total Available added -4,391, offices in 62 countries on 6 continents United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118 $1.8 billion in annual revenue 1.25 billion square feet under management Over 12,300 professionals COLLIERS INTERNATIONAL SAN JOSE 450 West Santa Clara Street San Jose, CA United States TEL FAX CA License No MANAGING PARTNER Jeff Fredericks, sior Managing Partner jeff.fredericks@colliers.com TEL CA License No RESEARCHER Terry Wang Research Project Manager terry.wang@colliers.com TEL This report and other research materials may be found on our website at This quarterly report is a research document of Colliers International San Jose, CA. Questions related to information herein should be directed to the Research Department at Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers International is the third-largest commercial real estate services company in the world with 12,300 professionals operating out of more than 522 offices in 62 countries Colliers International 2Q12 Gross Absorption 5,397,536 2Q12 Effective Net Absorption 1,005,686 Accelerating success.

7 MARKET COMPARISONS OFFICE MARKET CLASS BLDGS TOTAL INVENTORY SQ FT DIRECT VACANT SUBLEASE VACANT DIRECT OCCUPIED SUBLEASE OCCUPIED TOTAL AVAILABLE SQ FT RATE Q RATE Q NET ABSORPTION Q YTD COMPLETED Q UNDER CONSTR FS WTD AVG ASKING CAMPBELL / LOS GATOS A 19 1,123, ,391 3,054 35,221 1, , % 19.8% 2,369 60,788-55,510 $2.82 B 88 1,705, ,457-23,523 14, , % 11.4% 15,232 41, $2.18 C ,155 35,648-18,000-53, % 27.4% 11,481 6, $1.56 Total 121 3,000, ,496 3,054 76,744 16, , % 15.4% 29, ,109-55,510 $2.52 CUPERTINO / SARATOGA A 8 734,525 10,003 3,800 62,567 14,363 90, % 6.9% 7,931 6, $4.15 B 83 2,530,294 61,991-5,817 1,197 69, % 3.5% 18,326 32, $2.79 C ,394 4, , % 2.1% 1,887 4, $2.12 Total 112 3,555,213 76,208 3,800 68,384 15, , % 4.1% 28,144 44, $3.58 FREMONT / MILPITAS A , ,616 12,446 37, , % 35.3% (25,822) 4, $1.92 B 39 1,247, ,023-5, , % 26.7% (6,555) (15,660) - - $1.70 C ,178 57, , % 9.2% 1,535 (1,997) - - $1.58 Total 89 2,689, ,836 12,446 42, , % 25.1% (30,842) (12,841) - - $1.79 GILROY / MORGAN HILL A , , , , % 23.2% 2,813 17, $1.48 B 7 120,088 27, , % 24.7% 2,202 5, $1.06 C ,730 41,853-3,300-45, % 16.1% 820 4, Total , , , , % 20.6% 5,835 27, $1.45 LOS ALTOS A 9 231,534 13,151 2,979 11,924-28, % 13.6% 15,293 12,314-13,484 $4.76 B ,781 90, , , % 36.2% 4,955 6, $3.23 C ,356 15, ,125-19, % 4.0% 2,602 3, $3.41 Total 64 1,030, ,354 4,177 40, , % 16.4% 22,850 22,103-13,484 $3.70 MOUNTAIN VIEW A 22 2,196,395 49,715 17,935 71, , % 6.5% (29,949) (27,690) - 13,484 $5.06 B 45 1,085,736 93,830 5,750 49,841 10, , % 12.8% (10,763) 26, $3.43 C ,518 68,696 3,000 3,667-75, % 15.3% (3,746) (12,895) - - $2.69 Total 111 3,758, ,241 26, ,032 10, , % 9.4% (44,458) (14,166) - 13,484 $3.94 PALO ALTO A 63 2,806, ,405 48,740 82,220 5, , % 14.7% 16,262 (29,388) - 81,612 $5.83 B 105 2,406, ,139 32,006 19,029 6, , % 9.8% 5,509 (34,210) - - $4.04 C ,756 44,758 4,434 6,245 9,866 65, % 4.5% (13,791) (24,472) - - $3.94 Total 251 6,142, ,302 85, ,494 22, , % 11.2% 7,980 (88,070) - 81,612 $5.22 SAN JOSE A 84 11,342,644 2,327, , , ,630 2,846, % 25.3% (28,440) (49,379) - - $2.63 B 239 8,595,498 1,317,048 47,332 77,536-1,441, % 16.3% (67,586) (89,208) - - $1.78 C 187 4,193, ,557 12,905 28, , % 16.2% 25,545 (24,066) - - $1.52 Total ,131,479 4,265, , , ,630 4,949, % 20.5% (70,481) (162,653) - - $2.29 SANTA CLARA A 33 4,738, ,019 98,306 25, ,137 1,051, % 15.4% 53, , , ,000 $3.23 B 129 3,969, ,728 31,853 30,103 66, , % 25.0% 20,777 93, $2.16 C , , , % 25.1% 11,964 12, $1.53 Total 202 9,368,300 1,718, ,159 55, ,243 2,095, % 20.3% 86, , , ,000 $2.79 SUNNYVALE A 37 5,616, ,926 36,826 6,657 30, , % 13.0% (42,545) 98, ,481 $3.91 B 57 1,349, ,987 3,098 19, , % 11.6% (117,872) (86,898) - - $2.37 C , ,232-3, , % 32.0% 8,392 9, $1.96 Total 118 7,437,477 1,116,145 39,924 29,770 30,017 1,215, % 13.9% (152,025) 20, ,481 $3.41 SILICON VALLEY TOTALS A ,066,635 4,704, , , ,090 6,076, % 18.6% (28,686) 201, , ,571 $3.23 B ,335,741 3,233, , ,810 99,157 3,710, % 15.8% (135,775) (20,359) - - $2.19 C 515 8,588,813 1,182,690 20,553 65,623 9,866 1,278, % 15.0% 46,689 (23,370) - - $1.84 Total 1,631 61,991,189 9,119, ,279 1,014, ,113 11,065, % 17.0% (117,772) 157, , ,571 $2.80 QUARTERLY COMPARISON AND TOTALS 2Q ,991,189 9,119, ,279 1,014, ,113 11,065, % 17.0% (117,772) 157, , ,571 $2.80 1Q ,524,289 8,725, , , ,560 10,463, % 17.7% 275, , ,980 $2.60 4Q ,592,727 9,057, , , ,949 10,877, % 19.4% 584,091 2,058, ,536 $2.57 3Q ,619,625 9,867, ,687 1,031, ,214 11,939, % 22.3% 512,438 1,474, ,968 $2.57 2Q ,581,453 10,665, ,103 1,472, ,230 13,738, % 22.7% 680, , ,312 $2.60 P. 7 COLLIERS INTERNATIONAL

8 MARKET COMPARISONS R&D, INDUSTRIAL & WAREHOUSE MARKETS CLASS BLDGS TOTAL INVENTORY SQ FT DIRECT VACANT SUBLEASE VACANT DIRECT OCCUPIED SUBLEASE OCCUPIED TOTAL AVAILABLE SQ FT RATE Q RATE Q NET ABSORPTION Q YTD COMPLETED Q UNDER CONSTR NNN WTD AVG ASKING CAMPBELL R&D 69 1,416, ,718-53, , % 13.8% 28,376 34, $1.59 IND ,924 30,377-12,628 6,825 49, % 9.9% 5,984 14, $1.27 TOTAL 110 1,949, ,095-66,491 6, , % 12.9% 34,360 49, $1.57 CUPERTINO R&D 50 3,439, % 0.0% TOTAL 50 3,439, % 0.0% FREMONT R&D ,767,569 4,119, , ,432 72,799 4,752, % 24.9% 113,922 (99,622) 118,535 - $0.82 IND 355 9,113,518 1,388,544 40,229 48,585-1,477, % 17.9% 145,628 (863,439) - - $0.73 WSE 50 7,638, ,763-85,496 99, , % 16.2% 309, , $0.43 TOTAL ,519,246 6,211, , , ,291 7,119, % 21.2% 568,822 (649,729) 118,535 - $0.74 GILROY R&D 9 373, , , % 38.3% - (40,083) - - $0.72 IND 73 1,357, , , % 18.4% (640) (2,290) - - $0.59 WSE 18 3,224, , , , % 4.7% 10,760 (14,821) - - $0.41 TOTAL 100 4,955, , , , % 11.0% 10,120 (57,194) - - $0.60 LOS GATOS R&D ,159 24, ,833 52, % 12.2% 2,528 2, $1.81 TOTAL ,159 24, ,833 52, % 12.2% 2,528 2, $1.81 MILPITAS R&D ,905,692 1,796, ,368 5,760 91,624 2,001, % 14.6% 9, , $0.96 IND 118 2,943, ,080-72, , % 8.2% (28,864) 49, $0.72 WSE 37 4,761, ,429 59,849 26, , % 9.7% - 26, $0.48 TOTAL ,610,509 2,377, , ,733 91,624 2,740, % 12.7% (19,220) 616, $0.86 MORGAN HILL R&D 62 2,688, ,783-10, , % 19.2% (2,413) (5,387) - - $0.71 IND 76 1,882, , , % 13.7% 35,697 12, $0.79 WSE 5 384, % 0.0% TOTAL 143 4,956, ,938-10, , % 15.6% 33,284 7, $0.75 MOUNTAIN VIEW R&D ,971, ,288 55, ,444 75, , % 6.2% 168, , $1.95 IND 149 2,704, , , % 4.8% (6,274) (30,608) - - $0.82 TOTAL ,675, ,342 55, ,444 75, , % 6.0% 162, , $1.81 PALO ALTO R&D 59 10,292,315 94,130 26, , , % 2.5% 31,823 32, ,100 $2.26 TOTAL 59 10,292,315 94,130 26, , , % 2.5% 31,823 32, ,100 $2.26 SAN JOSE R&D ,333,993 6,976, , , ,193 7,969, % 17.2% 428, , $1.11 IND 1,085 22,571,733 1,267,702 84, ,455 5,000 1,496, % 7.4% 156, , $0.70 WSE ,365,906 1,193,586 83, ,004-1,639, % 9.6% (59,860) (459,429) - - $0.53 TOTAL 1,907 86,271,632 9,437, , , ,193 11,104, % 13.2% 524, , $1.00 SANTA CLARA R&D ,972,346 2,739, , ,272 42,000 3,099, % 14.9% 190,366 91, $1.49 IND ,827, ,063 13, ,663 7, , % 6.4% 70,014 3, $0.84 WSE 30 3,229, ,075 20,000 84, , , % 12.7% 12,800 58, $0.43 TOTAL 1,019 36,029,454 3,429, , , ,835 4,167, % 12.2% 273, , $1.41 SUNNYVALE R&D ,734,965 2,027, , ,715 40,052 2,572, % 10.8% (88,822) 173, $1.65 IND 183 3,200, ,922 3,060 23,000 1, , % 16.9% 11,813 4, $0.88 WSE 35 2,606,972 13, , , % 1.2% 18,600 26, $0.51 TOTAL ,542,651 2,524, , , ,296 3,187, % 10.6% (58,409) 204, $1.55 SILICON VALLEY TOTALS R&D 2, ,345,562 18,955,485 1,233,251 1,331, ,644 22,263, % 14.4% 882,647 1,580, , ,100 $1.20 IND 2,693 56,435,637 4,626, , ,955 21,200 5,209, % 10.0% 400,958 (525,165) - - $0.76 WSE ,696,973 2,669, , , ,196 3,878, % 10.4% 291,572 (49,364) - - $0.49 TOTAL 5, ,478,172 26,251,296 1,538,039 2,473,403 1,088,040 31,350, % 12.8% 1,575,177 1,006, , ,100 $1.08 QUARTERLY COMPARISON AND TOTALS 2Q-12 5, ,478,172 26,251,296 1,538,039 2,473,403 1,088,040 31,350, % 12.8% 1,575,177 1,006, , ,100 $1.08 1Q-12 5, ,519,637 28,003,464 1,740,619 1,912, ,729 32,372, % 13.1% (568,913) (568,913) - 118,535 $1.04 4Q-11 5, ,390,939 27,526,912 1,824,593 2,881, ,922 33,127, % 13.5% 978,849 1,198, ,535 $1.03 3Q-11 5, ,921,004 28,705,297 2,147,988 2,817, ,099 34,178, % 14.7% (236,016) 219, ,535 $1.01 2Q-11 5, ,950,254 30,950,283 2,406,292 3,289, ,232 37,240, % 15.3% 1,761, , ,535 $0.97 P. 8 COLLIERS INTERNATIONAL